Storage Software Sales Grow, Barely: Report


Revenue for the entire storage software market in the fourth quarter of 2008 reached $3.0 billion, up only 3.6 percent from the $2.9 billion in revenue IDC reported in the fourth quarter of 2007.

Last year, IDC said that storage software revenue in the fourth quarter of 2007 grew 11.2 percent compared to the fourth quarter of 2006.

While growth in the storage software market was slow, it was still much better than the storage hardware market. IDC reported last week that fourth quarter total disk storage system revenue dropped 5.9 percent compared to last year.

This year should see storage software sales grow compared to 2008, but growth will be lower than in the past, said James Baker, IDC's research manager for storage software. "Growth will be in the low end of single digits in 2009, but I don't think it will go negative," Baker said.

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Storage software revenue is growing despite the drop in storage hardware revenue because customers can use software to increase efficiency, Baker said. "Improving efficiency is an important way to get ahead in a bad economy," he said.

The rise in storage software sales even while storage hardware sales fall also reflects a general move away from spending on hardware toward controlling costs, Baker said.

"People are trying to trade capital expenses for operating expenses," he said. "So instead of buying more things with an on/off switch, they will spend more on software."

EMC kept its No. 1 spot on the list of top storage software vendors with estimated sales of $787 million, up 4.2 percent compared to last year, IDC said. Symantec stayed at No. 2 with sales of $556 million, up 6.9 percent over last year.

The biggest gainer in the fourth quarter was IBM, which saw its sales grow 10.1 percent year over year to reach $401 million for the third position. "In a downturn, there's safety in brand names," Baker said. "I think people are retreating to the safety of the brand name."

IBM was followed by NetApp, which actually saw a 5.7 percent drop in storage software sales to $227 million. Baker said the fall in NetApp sales may actually be a blip, and that sales should continue to grow in the future.

Hewlett-Packard and CA both also saw their storage sales fall in the fourth quarter. HP's sales fell 5.2 percent to $135 million, while CA's sales of $111 million represented a 4.7 percent drop.

Certain parts of the storage software market did better than others, according to IDC.

Sales of storage device management software rose 11.0 percent during the quarter, while sales of archiving software rose 10.7 percent, file system software 8.6 percent and data protection and recovery software 6.1 percent, Baker said.

The weakest part of the market turned out to be storage replication software, where sales fell 6.0 percent during the quarter, Baker said.

Storage replication software is a part of the market that has been maturing as vendors offer it less as a product and more of a feature in other storage products, he said. "We're also seeing replication added as part of a hardware bundle," he said. "Also, open-source replication software is starting to come to market."

Storage management software saw growth of only 0.1 percent over the last quarter of 2007 because of the economic downturn, Baker said.

"Customers are looking for quick-hit products for quick turnarounds," he said. "But when you take on a new management paradigm, that's a big project. People want to better manage their storage. But storage management is a magnitude kind of 'biggie,' and you don't want to take on a 'biggie' in an economic downturn. It's nice to have. But today you have to justify yourself not only to the IT committee but to the 'why-am-I-buying-anything' committee."